10 highlights of the Financial Mid-year Review
Citizens need not fear another increase in fuel prices just yet.
This, according to Finance Minister Colm Imbert, who provided an update on expenses on Wednesday during his presentation on The Finance (Variation of Appropriation) (Financial Year 2017) Bill, 2017.
A number of updates were announced as follows:
1. Oil priced at $47.50/barrel; Natural gas priced at $3.30/MMBtu
Oil production has increased to 76,000 barrels per day, an increase of 10,000 barrels, at a price of $47.50 WTI. Natural gas is currently priced at $3.30/MMBtu.
2. No fuel increases at this time
Imbert said there would be no increase in fuel prices at this sitting. He said this is due to the creation and application of a pricing formula which is being worked on ‘at this time’.
However, he said Government stands by its mandate to reduce the fuel subsidy over a three-year period from 2015-2018.
3. No depreciation of currency
Imbert added that at this time there would be no change in the current TT$6.75 exchange rate.
“We will work in tandem with the Central Bank to ensure that there is an orderly exchange rate regime, based on foreign exchange inflows and the demand for foreign exchange, with a suitable focus on the facilitation of exports. There will be no drastic or sudden depreciation of the currency," he said.
4. Heritage Stabilisation Fund now at US$5.54 billion
Imbert said that since assuming office in September 2015, Government made two withdrawals from the Heritage Stabilisation Fund and that despite this, the fund has recovered to US$5.54 billion at the end of April 2017.
“Madame Speaker, I am pleased to report that despite a second drawdown from the Fund in just the last two months, the balance in the Heritage and Stabilisation Fund has increased by US$100 million to US$5.54 billion at the end of April 2017,” he said.
5. Unemployment increased to four percent
Imbert said according to data from the Central Statistical Organisation (CSO), the country’s unemployment rate has increased from 3.4 percent in 2015 to four percent in 2016, raising the number of unemployed persons from 21, 900 in 2015 to 25,500 at the end of 2016.
“This is a far cry from the wild figure of 25,000 job losses being bandied about by members opposite,” he said.
6. Public debt stands at $89.1 billion
Government’s total public debt now stands at $89.1 billion with a debt to GDP ratio of 61.1 percent.
Imbert said however that this represents an increase in the debt to GDP ratio of just one percent since October 2016.
He said that the country’s debt ballooned from $45.4 billion in 2010 to $76.5 billion in 2015, a 70 percent increase “when the members opposite were in charge.”
“This massive increase in debt has presented us with another serious financial challenge. It should be noted that at the end of 2016 public sector debt was 87.6 billion, which equated to a debt to GDP ratio of 60.1 percent,” he said.
“However, despite our very serious financial challenges, the net public debt only increased to 89.1 billion, representing an increase in our debt to GDP ratio of just one percentage point from 60.1 percent to 61.1 percent between October 2016 and March 2017, in stark contrast to the excesses of the past,” he said.
7. Government expenditure 14 percent lower than expected
Imbert added that Government expenditure for the half year was 14 percent lower than projected.
“In the six months of the fiscal year, we had projected to spend $27.3 billion, roughly half of the approved budget of $53 billion. We actually spent $23.5 billion, or $3.8 billion less than projected,” he said.
He said government expected to receive $6.3 billion in capital revenue in the first half of the year due in part from the sale of CLICO assets. He said these have been delayed due to legal ‘road blocks’ which government is in the process of unravelling.
He said there was also a shortfall in projected VAT collections amounting to $669 million.
“There are indications that the major problem continues to be the long-standing weakness in our tax administration in both the Customs and Excise Division and the Board of Inland Revenue,” he said.
Imbert added income tax collections amounted to $743 million, 11 percent higher than projected, due in part to the 30 percent tax bracket on corporations and the ‘millionaire tax’ on persons with annual taxable incomes exceeding $1 million.
8. Projected revenue increased to $48 billion
Total projected government revenue has been revised from $47.4 billion to $48 billion, which Imbert says was largely due to an expected increase of $575 million from income taxes from petroleum companies.
He added that government has also increased tax collections to 3.6 billion compared to the original budget projection of $2.6 billion, an increase of $1 billion.
9. Public servants paid for 2017
$1.8 billion in outstanding monies owed to public servants for the year 2017 has been paid.
“The bulk of the additional outstanding wage arrears to public officers for this year 2017, amounting to $1.8 billion, been paid,” Imbert said.
He said the payment of arrears of salary makes a total of almost $5 billion in back pay paid off by government since September 2015.
He added that the outstanding arrears due to contractors has also been reduced as they continue to verify claims.
10. No change in property tax deadline
Imbert said the existing deadline of May 22, 2017, for the submission of property tax valuation forms has not changed.
“We do not intend to extend this deadline since it is necessary to get on with the job…so that tax collection can commence,” he said.